Nick Clegg vows to boost growth in 'painful recovery'

Nick Clegg today pledged to "do more for growth" as Britain's economy took another battering.

In his keynote speech to the Liberal Democrat conference, he warned of a "slow and painful" recovery and hinted that he was fighting for the Coalition to agree an extra stimulus.

"Deficit reduction lays the foundations for growth. But on its own it is not enough," he said. "The outlook for the global economy has got worse. So we need to do more, we can do more, and we will do more for growth and jobs."

His speech came after reports that unnamed Lib-Dem ministers were planning a £5 billion investment programme in capital spending - firmly denied by the Treasury.

Meanwhile the parlous state of the UK's finances was laid bare by official figures showing record government borrowing last month despite the tough austerity measures.

Public sector net borrowing, excluding financial interventions such as bank bail-outs, hit £15.9 billion in August, up £1.9 billion on the same month a year ago. This was the highest figure for the month since records began in 1993 and £3 billion more than predicted by economists.

Chancellor George Osborne won some relief with revised figures showing that borrowing was £4.6 billion lower than previously thought between April and July. But economists still believe he will miss his target of cutting borrowing to £122 billion in 2011/12.

Mr Clegg devoted much of his speech to setting out his aim of supplanting Labour as the party of economic competence. He said: "Right now, our biggest concern is of course the economy. The recovery is fragile. Every worker, every family knows that. There is a long, hard road ahead."

Earlier in the conference, Treasury minister Danny Alexander was forced to deny that Cabinet ministers were discussing plans to tear up the Government's spending plans and inject up to £5 billion more into capital projects.

"We have clear spending plans that we are sticking to and that is something that we should not sacrifice because the economic cost of doing so for this country would be very substantial indeed," he told BBC Radio 4's Today programme.

Lib-Dem party officials added to the confusion by appearing unclear about the plans. At first they said that the spending plans could be brought forward, but then they insisted that it could not happen.